ORDER GRANTING . . . 1Docket No. 2008-400

SUBJECT TO CONFIDENTIAL TREATMENT UNTIL

January 26, 2009

STATE OF MAINEDocket No. 2008-400

PUBLIC UTILITIES COMMISSION

January 12, 2009

MAINE PUBLIC UTILITIES COMMISSIONORDER DESIGNATING

Standard Offer Bidding Procedure forSTANDARD OFFER

CMP and BHE Residential and Small PROVIDER

Non-Residential Customers and all MPS

Customer Classes

REISHUS, Chairman; VAFIADES and CASHMAN, Commissioners

I.SUMMARY

Through this Order, wedesignate New Brunswick Power Generation Corporation (NB Power) as the standard offer provider for the residential and small non-residential, and the medium non-residential customer classes in the Maine Public Service Company (MPS) service territory for a two-year period beginning March 1, 2009. We also designate Integrys Energy Services, Inc. (Integrys) as the standard offer provider for the large non-residential class in the MPS service territory. The resulting first year price for the three customer classes beginning March 1, 2009 will be: residential/small non-residential-$0.083333/kWh; medium non-residential-$0.08950/kWh; and large non-residential $0.09700/kWh.

II.BACKGROUND

Pursuant to Maine’s Restructuring Act, the Commission periodically administers a competitive bid process to select providers of standard offer service. 35-A M.R.S.A. §212(2). The arrangement with the current standard offer provider for all customer classes in the MPS service territory terminate on February 28, 2009. Accordingly, on October 9, 2008, the Director of Technical Analysis initiated the process to solicit bids for the provision of standard offer service to the three MPS classes for the period beginning March 1, 2009. The Commission request for proposals (RFPs) set out the procedure to be followed in soliciting bids and selecting standard offer providers. The RFP allowed for bids for term lengths of one, two, and three years. Pursuant to the RFP, indicative pricing was due on November 5, 2008. Upon the conclusion of discussions on non-price items, bidders were requested to present final, binding bids on January 12, 2009.

III.DECISION

As mentioned above, the RFP allowed for bids for term lengths of one year, two years and three years. We decide to select bids for two years for all of the customer classes in the MPS service territory. A two year terms balances the need for some level of rate stability against the risks of locking prices in for multi-year periods.

Upon review of the bids and the selection criteria in Chapter 301, we conclude that NB Power provided the lowest bids for service to the residential and small non-residential class, and the medium non-residential class, and that Integrys provided the lowest bid for service to the large non-residential class.[1] We, accordingly, designate NB Power as the standard offer provider for the residential and small non-residential class and the medium non-residential class in the MPS serviced territory, and Integrys as the standard offer provider for the large non-residential class in the MPS service territory. Based on decision today, the first year price for service beginning March 1, 2009 will be: residential/small non-residential-$0.083333/kWh; medium non-residential-$0.08950/kWh; and large non-residential $0.09700/kWh.

In designating NB Power and Integrys as standard offer providers, we accept their statements of commitment and bidder conditions. These documents are attached to and incorporated into this Order. We find that these documents provide useful clarifications as to precise nature of the standard offer providers’ obligations, as well as reasonable protections for the providers with respect to actions of the Maine Legislature, this Commission or the utility. We understand all conditions of the winning bidders are satisfied or will be shortly after the issuance of this Order. We are informed that the modified Standard Offer Provider Service Agreements that were attached to winning bids are acceptable to MPS and we concur that the changes from the standard form are reasonable.

Our RFP and the standard contract incorporate a “margining” approach to financial security in which the amount of security to be posted by the supplier varies with market conditions and the amount of expected standard offer load. MPS has agreed to perform the margining function. We recognize that Chapter 301 does not require utilities to perform margining functions with respect to standard offer service and that such a margining function imposes additional risk on T&D utilities. We explicitly find that MPS shareholders shall not be subject to any prudency risk or financial liability with respect to its margining activities related to standard offer service for any actions it takes and decisions that it makes in the ordinary course of business of managing the margining requirements, as long as it takes reasonable steps to inform the Commission of its activities in this regard. [2] To the extent that any other person or entities seek to impose any such prudency risk or liability on MPS in contravention to the previous sentence, any resulting direct or indirect costs, obligations, expenses or damages incurred by MPS shall be fully recovered, with carrying costs, from customers either through utility rates or standard offer prices.

Similarly, we also recognize that the bidder conditions approved in this Order may create certain risks and obligations for MPS. Risks imposed by the bidder conditions are properly borne by customers and not shareholders. Therefore, we explicitly find that any direct or indirect costs, obligations, expenses or damages reasonably incurred by MPS in fulfilling its contractual obligations or exercising its contractual rights under the standard agreement, or in satisfying the bidder conditions we have accepted, shall be fully recovered, with carrying costs, from customers either through utility rates or standard offer prices.

Dated at Augusta, Maine, this 12th day of January, 2009.

BY ORDER OF THE COMMISSION

______

Karen Geraghty

Administrative Director

COMMISSIONERS VOTING FOR:Reishus

Vafiades

Cashman

[1]The NB Power accepted bid for the small class is Year 1-$0.083333/kWh and Year 2-$0.08625/kWh. The NB Power accepted bid for the medium class is Year 1-$0.08950/kWh and Year 2-$0.09300/kWh. The Integrys accepted bid for the large class is Year 1-$0.09700/kWh and Year 2-$0.10056/kWh.

[2] The reasonable steps will include, but not be limited to, weekly e-mail communications from the MPS to Commission Staff reporting current market prices and MPS’s calculation of Excess Market Exposure.